International Economics
parts, engines, and bodies) to Canada, Mexico
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Dominick-Salvatore-International-Economics
parts, engines, and bodies) to Canada, Mexico, Europe, and Japan in 1965, 1973, 1980, 1985, 1990, 1995, 2000, 2005, and 2010. Automobile and automotive products of various producers in different nations are not identical but differentiated and thus give rise to intra-industry trade. The very rapid growth of U.S. intra-industry trade in automotive products between 1965 and 2010 was due to the reduction in trade protection and transportation costs and, in the case of U.S. trade with Canada, to the U.S.-Canadian auto agreement of 1965, which established free trade for these products between the two countries. This enabled Canada to reduce the number of models it produced (thereby achieving greater economies of scale in production), while at the same time increasing the number of models available to Canadian consumers through imports from the United States. U.S.-Mexican intra-industry trade in automotive products also grew very rapidly as a result of NAFTA (North American Free Trade Agreement), which took effect on January 1, 1994. NAFTA is discussed in detail in Chapter 10. In the future, big-car production is likely to be concentrated in the United States and Canada, while small-car production is likely to shift to Mexico. Note the largely two-way nature of U.S. trade in automotive products with Canada, Mex- ico, and Latin America, as opposed to the mostly one-way trade with Japan. The decline in trade in automotive products in 2010 (except with Mexico) was due to the slow growth in the world economy. Salvatore c06.tex V2 - 10/16/2012 9:50 A.M. Page 164 164 Economies of Scale, Imperfect Competition, and International Trade ■ CASE STUDY 6-3 Continued ■ TABLE 6.2. U.S. Imports and Exports of Automotive Products (billions of dollars) Year Canada Mexico Europe Japan World Imports 1965 .11 − .07 .01 .19 1973 4 .92 − 3 .14 2 .41 10 .55 1980 7 .87 .22 6 .73 11 .85 26 .94 1985 20 .77 2 .93 11 .84 24 .55 58 .57 1990 27 .71 4 .39 13 .27 30 .12 79 .32 1995 41 .63 12 .11 15 .65 34 .94 108 .02 2000 58 .75 28 .30 29 .11 44 .49 170 .20 2005 64 .42 29 .86 43 .06 49 .37 205 .45 2010 47 .96 43 .73 33 .63 42 .92 189 .76 Exports 1965 .62 − .07 − .87 1973 4 .12 − .48 .09 6 .03 1980 9 .54 1 .35 1 .46 .19 16 .74 1985 16 .32 2 .72 1 .15 .21 21 .07 1990 19 .48 3 .57 3 .65 1 Download 7.1 Mb. Do'stlaringiz bilan baham: |
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